The broad scope of the Township's taxing powers
is limited by certain provisions in the ordinance and by federal and
state law. The principal exemptions, exclusions and limitations are
described in this Article.
The ordinance does not include within the definition
of gross receipts from sales of goods, wares, or merchandise attributable
to a place of business regularly maintained by the taxpayer outside
the Township.
The ordinance generally does not include within the definition of gross receipts from the performance or rendering of any service no part of which was performed or rendered within the Township, except gross receipts otherwise includable under § A170-18B.
The ordinance does not include within the definition
of gross receipts the amount of any allowance for goods taken by a
dealer as a trade-in or as part payment for other goods in the usual
and ordinary course of business. However, the entire amount received
upon resale of such goods is included in the gross volume of business
at the time of resale.
Sales by nonexempt persons to nonprofit corporations
or associations organized solely for religious, charitable, or educational
purposes and not conducting any regular or established business competing
commercially with any person and exempt from income tax under the
Internal Revenue Code of 1986, as amended, or to federal and Pennsylvania
government agencies, political subdivisions and authorities created
and organized under and pursuant to any act of assembly are not exempt
from this ordinance. In addition, sales of goods or food and beverages
by nonprofit organizations other than religious, charitable, or educational
organizations are not exempt from this ordinance.
Receipts from the first sale of goods, wares,
and merchandise manufactured by the taxpayer are exempt from the ordinance
under state law.
The business privilege tax applies if the taxpayer
is carrying on or engaging in business or a commercial activity within
the Township. Generally, receipts from sales transactions will be
considered allocable to the Township if a part of the transaction
involving the receipt and/or acceptance of orders, the shipment of
customer goods, or the receipt of payment for goods takes place within
the Township. The place of shipment or delivery of the goods is not
determinative of the situs of the sale. Similarly, receipts attributable
to provision of services are allocable to the Township if the services
are performed and/or payment received within the Township. Receipts
attributable to provision of services outside the Township are also
allocable to the taxpayer's place of business in the Township, except
to the extent such receipts are attributable to an office or place
of business regularly maintained by the taxpayer outside the Township.
Under certain circumstances, receipts from sales in interstate or foreign commerce may be exempt from tax in whole or in part even though allocable to a place of business in the Township under § A170-17 above. Receipts are not automatically exempt from tax merely because the sale involves interstate or foreign commerce. The controlling principles in determining whether any such receipts are subject to tax are that there be some nexus between the business activity carried on in the Township and the imposition of the tax and that there be a fair method of allocation of receipts to the business carried on in the Township which will avoid an undue burden on foreign or interstate commerce. The burden is generally on the taxpayer to establish that the receipts are exempt from tax. Bearing these principles in mind, the following methods of allocation will be followed by the Township:
A.
Receipts directly payable or paid to a place of business
located within the Township shall be considered allocable to the Township
and subject to tax.
B.
If the business tax receiver determines, either upon their own initiative or upon application by the taxpayer, that the receipts covered by Subsection A above do not properly reflect all receipts attributable to the activity carried on in the Township, then to the extent possible (bearing in mind the accounting system used by the taxpayer and any other information reasonably capable of being derived from the books and records of the taxpayer), a separate accounting shall be made with respect to each place of business, and all receipts attributable to each such place of business, in the Township shall be considered allocable to the Township and subject to tax.
C.
If the business tax receiver, either on his or her own initiative or upon application by the taxpayer, determines that the provisions of Subsections A and B above do not properly reflect all receipts attributable to the activity carried on in the Township, then gross receipts shall be apportioned to the Township by multiplying all gross receipts of the taxpayer for the tax period by a fraction, the numerator of which is the property factor plus the payroll factor plus the gross receipts factor (such terms being hereinafter defined), and the denominator of which is three.
(1)
Property factor. The property factor is a fraction,
the numerator of which is the average value of the taxpayer's real
and tangible personal property. owned or rented and used in this Township
during the tax period and the denominator of which is the average
value of all the taxpayer's real and tangible personal property owned
or rented and used during the tax period, but shall not include the
security interest of any corporation as seller or lessor in personal
property sold or leased under a conditional sales, bailment lease,
chattel mortgage or other contract providing for the retention of
a lien or title as security for the sales price of the property.
(a)
Property owned by the taxpayer shall be valued
at its fair market value. Solely for the purposes hereof, property
rented by the taxpayer shall be valued at eight times the net annual
rental rate. Net annual rental rate is the annual rental paid by the
taxpayer, less any annual rental rate received by the taxpayer from
subrentals.
(b)
The average value of property shall be determined
by averaging the values at the beginning and ending of the tax period,
but the business tax receiver may require the averaging of monthly
values during the tax period if reasonably required to reflect properly
the average value of the taxpayer's property.
(2)
Payroll factor. The payroll factor is a fraction,
the numerator of which is the total amount paid in this Township during
the tax period by the taxpayer for compensation and the denominator
of which is the total compensation paid everywhere during the tax
period. Compensation is paid in this Township if:
(a)
The individual's service is performed entirely
within the Township;
(b)
The individual's service is performed both within
and without this Township, but the service performed without the Township
is incidental to the individual's service within this Township; or
(c)
Some of the service is performed in this Township
and the base of operations (or if there is no base of operations,
the place from which the service is directed or controlled) is in
this Township, or the base of operations or the place-from which the
service is directed or controlled is not in any jurisdiction in which
some part of the service is performed, but the individual's residence
is in this Township.
(3)
Gross receipts factor. The gross receipts factor
is a fraction, the numerator of which is the gross business revenues
of the taxpayer in this Township during the tax period, and the denominator
of which is the gross business revenues of the taxpayer everywhere
during the tax period.
D.
If the business tax receiver, either on his or her own initiative or upon application by the taxpayer, determines that the provisions of Subsections A, B, and C above do not properly reflect all receipts attributable to the activity carried on in the Township, a different method of allocation may be used, with due regard to the extent of the receipts, property and payroll of the taxpayer within the Township, the nature of the business concerned, the number of jurisdictions in which the receipts may be taxed, and such other factors as may be considered relevant, in order to determine a proper apportionment of revenues attributable to the Township and subject to tax hereunder:
E.
All receipts from interstate commerce, whether taxable
or nontaxable under the foregoing rules, must be included on the return
filed by the taxpayer, and a deduction for the nontaxable receipts
shall be allowed thereon.
A.
Persons rendering professional, commercial, industrial
or personal services. If a person engaged in a profession or vocation
or in rendering personal services maintains a place of business only
in the Township, the entire receipts from such personal services must
be included in the measure of tax, whether or not the services are
performed in the Township. Receipts will be deemed attributable to
the Township if they result from the efforts of employees who work
in, from or are attached to the taxpayer's Township place of business.
B.
Lessors of tangible personal property. Persons doing
business within the Township who own and hold title to tangible personal
property which is leased to others are required to report the entire
gross receipts from the rental of or license to use such property.
C.
Lessors of real property. Persons doing business.
within the Township who own and hold title to real property which
is leased to others are required to report the gross receipts from
the rental of all such property which is situated in the Township.
A.
Nominal or registration fees. The fact that a taxpayer
receives a certificate or other document which is designated a license
by the Commonwealth of Pennsylvania for which the taxpayer pays a
sum of money does not exempt the taxpayer from the tax. Flat annual
fees, fees which are not related to gross income or amount of production,
or fees that are nominal in nature are not considered true license
fees and, hence, payment of such fees will not exempt the taxpayer
from the tax.
B.
Local licenses or permits. Payments to the Township
for licenses and permits, as required by Township ordinances, will
not exempt the taxpayer from the tax.
The gross receipts of any manufacturer, attributable
to the business of manufacturing, shall be excluded from the tax base.
The business of manufacturing consists of giving new shapes, qualities
or combinations to material which has already gone through some other
artificial process, creating a new and different article with a distinctive
name, character and use.. Manufacturing involves the application of
labor and skill which changes a material substantially into a new,
different and useful item. Whether or not an article is a manufactured
product depends on whether or not it has gone through a substantial
transformation in form, qualities and adaptability in use from the
original material, so that a new article or creation has emerged.
If there is merely a superficial change in the original materials
without any substantial and well-signalized transformation in form,
qualities and adaptability in use, it is not a new article or new
production. Processing of material which does not result in a new
and different product does not constitute manufacturing.
